You own 10 shares of standard motors bonds these bonds pay


You own 10 shares of Standard Motors bonds. These bonds pay an annual coupon payment of $100 dollars, have a par value of $1000 and 10 years until maturity. Standard Motors is having financial difficulty and has requested postponement of the interest payments for the next 5 years. Standard Motors expects to make the interest payments for years 6 through 10 when due. It is just the next 5 payments they would like postpone. The postponed payments will accrue interest at a rate of 12% and will be paid in a lump sum at maturity. Because of the financial problems being experience by Standard Motors, investors are now requiring a rate of return of 25% on the bonds. How much can you sell each of your Standard Motors bonds for? 

Select one: 

A. $886.99 

B. $315.71 

C. $252.57 

D. $249.18 

E. None of the above

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Finance Basics: You own 10 shares of standard motors bonds these bonds pay
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